UC leaders defend pension decision

The University of California’s top two officials have issued a statement elaborating on their position that the system’s highest paid executives are not entitled to enhanced pension benefits.

Thirty-six of those executives, including five who work at UCSD, have threatened a lawsuit against the university unless they receive the benefits they believe were promised to them in 1999.

The two-paragraph statement, issued by UC President Mark Yudof and Russell Gould, chairman of the university’s Board of Regents, says that “for reasons of fiscal prudence in a changing economy” university officials never took the necessary steps to enact the pension boost.

But the executives contend the regents are bound to grant the enhancement.

“We believe it is the university’s legal, moral and ethical obligation” to increase benefits for employees earning more than $245,000 annually, they wrote in a Dec. 9 letter, originally obtained by the San Francisco Chronicle. “Failure to do so will likely result in a costly and unsuccessful legal confrontation.”

For the purposes of the university’s pension calculations, an employee’s highest salary is capped at $245,000, regardless of what he or she is actually paid. Thus, the maximum annual pension for 30-year employees is $183,750, whether they earned $245,000 or $700,000 annually.

Under the same formula without a cap, a $700,000 salary could entitle an employee to an annual pension of $525,000.

The signers of the letter contend the regents agreed in 1999 to lift the cap so long as the Internal Revenue Service allowed them to do so. In 2007, the IRS ruled that the cap could be lifted.

While Yudof and Gould acknowledged the IRS ruling in a statement Tuesday, they said “it did not obligate the university in any way to proceed with its proposal.”

A university spokesman said about 225 current employees and 57 retirees would be affected if the boost were granted.

Nearly 1,000 UC faculty and staff have signed a petition in recent days condemning the executives’ threatened lawsuit. And the UC Academic Senate has been on record against the proposed pension increase since March 2009. They contend the enhanced pensions would exacerbate the university’s existing budget challenges.

The UCSD executives who signed the letter earn between $226,611 and $755,897 annually. Through spokeswomen, four declined to comment Tuesday. The fifth did not respond to a message seeking comment.